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Chinese Clients Ditching PwC After China Evergrande Fiasco

Five large corporates have severed ties with global accounting giant after claims it turned a blind eye to misconduct at China Evergrande – which it strongly denies

More than 30 listed companies in China have dropped the auditing giant after the China Evergrande fiasco. PwC's logo is seen at its office in Berlin in this Reuters image from Sept 2019.


PwC – the accounting and professional services conglomerate formerly known as PriceWaterhouseCoopers – has a crisis on its hands in China.

Close to half a dozen large Chinese companies have or are terminating contracts with the group amid concern over alleged financial fraud tied to the fallen real estate giant China Evergrande.

China Cinda, a state-owned asset manager, announced on Monday that it has severed ties with PwC and will use Ernst & Young for 2024, saying in a stock exchange filing that the move was made to “practice sound corporate governance and further improve the quality of external audit work.”


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“China Cinda’s announcement came less than a week after Shenzhen-listed China Merchants Port Group withdrew its proposal to hire PwC as its auditor for the year, following similar moves by corporate giants such as China Merchants Bank, China Railway Group, and Mindray Bio-Medical Electronics,” the South China Morning Post reported on June 3.

It noted that China’s Ministry of Finance is considering imposing a record fine of at least 1 billion yuan ($138 million) on PwC for alleged auditing malpractices involving China Evergrande, and could suspend some of the accounting giant’s local operations.

The case, which some have likened to the Enron scandal in the US two decades earlier, is a tricky one because of China Evergrande’s vast size and complexity. More than 800 projects lie unfinished in more than 200 cities across China, the SCMP said, including more than a dozen giant entertainment parks said to rival Disneyland in size, that may never open.

The group was hammered by Beijing’s ‘three red lines’ policy which sought to restrict developers’ business risky practices and the Covid-19 pandemic, which greatly negated real estate sales – leading to a debt of $340 billion by late 2023.


Once Asia’s richest man, Hui Ka Yan has lost his fancy homes, and may soon lose his freedom, given the crimes he and his executives are accused of (Reuters).

Given its spectacular debt load, allegations of possible criminal activity by its founder Hui Ka Yan, and President Xi Jinping’s oft-repeated mantra that “homes are for living in, not speculation,” it was no surprise when a judge in Hong Kong’s High Court ordered Evergrande to be liquidated in January.

China’s securities watchdog has accused Evergrande of inflating its sales and profits by huge amounts – 564 billion yuan ($79.4 billion) and 92 billion yuan ($12.95 billion), respectively, in the years before its collapse in 2021.

It hit Hui Ka Yan with a 47 million yuan fine and banned him from participating in the country’s capital markets for life.

PwC denies ‘turning a blind eye’ to misconduct

In April a letter began circulating on China’s social media that accused PwC of “turning a blind eye” to misconduct by Evergrande. The firm strongly denied the claim, which it described as “false information.”

Where this will end is hard to say. Many analysts have said it will take years to unravel Evergrande’s businesses, partly because the liquidation order from a Hong Kong court may be contested by provinces on the mainland.

Beijing appears to be targeting a downsizing of the real estate sector and far greater state control, with the government buying up distressed private projects and converting them to homes the state could rent out or sell.

China’s property sector has suffered a dramatic slowdown with home prices down 11%, according to the latest official data.

With dozens of companies in default and tens of millions of homes yet to be sold, analysts say the sector is unlikely to ever return to its former size.

For PwC, it’s hard to know where this crisis will end. Regarded for many years as a global accounting leader, the group was hit hard by a serious ethical scandal in Australia. And, even without a fine imposed in China – which may well be contested – the damage appears to already be happening.


  • Jim Pollard



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Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years.


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